UC faces losses, fee hikes

Gov. Gray Davis proposed $8.3 billion in tax increases and over
$20 billion in program cuts that spare no one, including
students.

Undergraduate student fees would go up by nearly $800 per year
to make up for cuts to the University of California’s budget
if Davis’ plan for the 2003-04 fiscal year is approved.

UCLA will lose millions of dollars, outreach funding will be cut
in half, and there will be no allocation to staff or faculty pay
raises.

Gov. Davis’ proposal, announced Friday, is subject to
revision by both the Assembly and the Senate, where it must receive
bipartisan support to pass by the July 1 deadline.

“All the choices before me were hard, but had to be made
in order to balance our books,” Davis said.

These actions are part of Davis’ plan to manage the
state’s $34.6 billion deficit, the largest in California
history.

He proposed a one cent per dollar increase in sales taxes,
increased tax brackets for the state’s biggest earners, and a
$1.10 per pack increase in cigarette taxes.

State health and welfare programs would be transferred to local
governments, which Davis said will help stabilize future budgets.
He said he is also planning to lay off 1,500 state workers.

UCLA will lose $4 million in state funding this year and another
six million next year, said UCLA Vice Chancellor of finance Steve
Olsen.

The university is investigating how the cuts will affect the
UCLA Medical Center, which receives some state funding, Olsen
said.

But over half of the nearly $300 million in cuts to the UC were
to the university’s instructional budget, which the Governor
had protected until now.

The governor assumes the UC Regents will raise student fees to
make up for these cuts, said state Department of Finance Director
Tim Gage.

The fee increase of $795 per year for undergraduate residents
and $855 for graduate residents would be in addition to a fee
increase of $405 per year that the Regents approved last month.

Between the two increases, resident fees for fall 2003 would be
35 percent higher than fees for fall 2002.

“A fee increase is always difficult, and the current
economic climate makes this a particularly bad time for families to
absorb a further increase,” UC President Richard Atkinson
said in a statement.

The Regents have yet to discuss this second fee increase and
Hayward said fees will not be finalized until the spring.

Davis also expects the California State University to raise
fees, and would more than double the cost of community colleges
from $11 to $24 per unit.

Both the Governor and the University have said lower-income
students should not be affected by university fee increases,
because one-third of the new revenue will fund Cal Grants to cover
the higher cost for financial aid recipients.

Along with rising student fees, many UC programs face severe
cuts in Davis’ budget.

It cuts student outreach ““ a program intended to help the
university attract underrepresented students ““ in half.

“This is a particularly difficult cut because the
university has made a deep commitment to … expanding access to a
college education,” Atkinson said.

Student services funded by registration fees will take a 20
percent cut, research will be cut by 10 percent and no funds are
provided for staff and faculty pay raises.

The UC Regents must decide how to distribute the cuts among the
UC campuses.

But the governor’s budget does provide an additional
$117.2 million to fund enrollment growth for 8,000 new students in
2003-04 and to compensate the university for 5,000 unfunded
students this year.

It also provides $11.3 million to speed up the construction of
UC Merced so it can open on schedule in fall 2004.

The largest revenue gain in Davis’ proposed budget would
come from raising sales taxes by one cent per dollar of sales.

A typical family would pay between $200 and $250 per year in
additional sales taxes. The state would raise $4.5 billion per
year.

Republican Assembly leader Dave Cox, R-Fair Oaks, said
Davis’ proposal would force nearly 500,000 jobs out of the
state.

“The governor’s message to small business owners and
working families is clear: if you’re thinking about leaving
California, you should do so as soon as possible,” Cox said
in a statement.

He also accused Davis of overestimating the size of the deficit
to convince people that tax increases are necessary.

Non-partisan Legislative Analyst Elizabeth Hill estimated the
budget deficit would be $21 billion over the next two years.

A month ago Davis revised this estimate to $34.7 billion, but
Hill has not changed her estimate.

Davis is optimistic that Republicans will pass a plan that
includes tax increases.

“At the end of the day this legislature has always come
through,” Davis said.

There were many other types of tax increases, such as taxes on
sales made over the Internet, that Davis considered but did not
include in his budget.

He did not propose to increase the vehicle license fee, which
had been a major source of revenue for local governments before
Davis cut the fees.

All of the tax increases would go to local governments under
Davis’ plan ““ a move which prevents mental health,
child care, and community health programs from being cut ““
but local government will now have to administer them.

Davis said his tax increases would enable counties to run the
programs effectively.

“We are providing enough funding to keep programs existing
at their current levels,” Davis said.

But county officials objected to being put in this position.

“˜”˜It’s just unbelievable that we could be
asked to contribute this much when we had nothing to do whatsoever
with putting the state in this situation in the first
place,” said Pat Leary, director of the California
State Association of Counties.

With reports from Daily Bruin wire services.

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